How to improve the success rate of M & A under performance commitment - PowerPoint Presentation

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How to improve the success rate of M & A under performance commitment?

吴丁丁 17721007

With the increasing number of M & A cases in China's Listed Companies in recent years, the use of performance commitments has been increasing frequently in order to reduce the loss of M & A to investors. Although the performance commitment has almost become a necessary clause for the merger and acquisition of the listed companies, the proportion of the underlying enterprise losses in the merger and acquisition, which can not achieve the performance commitment or even the failure of the merger and acquisition, is still high. This situation will not only blow up the investors who are now active in the capital market, but also let the prospective investors be deterred and even harm the healthy development of China's capital market. This paper intends to analyze the impact of the performance commitment clause on the merger and acquisition through the case of some incidental performance commitment, and then puts forward some suggestions for improving the performance commitment terms

.

Abstract

Option theory: option is also called option. It is a usually tradable derivative financial tool. According to the price of a certain asset (such as equity, stock index or futures) in a certain period of time, the rights of the buyer and the seller's obligation in the option transaction are determined. In the transaction of the option, the Party of the option is called the buyer, and the party that sells the option is called the seller; the buyer is the assignee of the right, and the seller is obliged to perform the buyer's exercise of the right. Option theory is a derivative financial instrument derived from futures, which is closely related to options.

Literature review

Literature review

Asymmetric information theory: information asymmetry theory is to grasp the information in economic activities to convey different sides, and the more abundant information has the advantage. Information asymmetry brings about adverse selection and moral hazard.

Signal transmission hypothesis: the theory holds that the real capital market is an imperfect capital market, and there is information asymmetry between the management of the company and the external investors. As a result, investors can only evaluate the value of an enterprise by information conveyed by the management

.

Literature review

On the basis of comprehensive theory, when a listed company takes M & A, the performance of its undertaking will restrict the management behavior of the acquired party. As once a performance commitment is achieved, a reward is usually given by the purchaser; and the failure to meet the promised performance standards will lead to the acquirer to claim compensation from the buyer, causing the buyer to suffer losses. But the low standard of performance commitment will be realized because it is too simple, which makes the performance commitment lose its binding force to the acquirer; the high performance commitment standard will lead to the loss of the hope of completing performance commitments by the acquirer and thus lose power

.

Suppose

P

erformance commitment will constrain the management behavior of the acquirer;

The

difficulty of achievement commitment is difficult to affect the binding of performance commitment to the acquirer.

Hypothesis

1. Literature review

Through consulting the books, materials and periodicals of the Shanghai

University library, the Shanghai library, the Internet, the Chinese knowledge network, the Chinese periodicals and the periodicals, this paper collate and analyze the relevant literature at home and abroad, obtain the relevant research information, and carry on the further analysis and analysis, as the most basic information of this article.

Methods

2.Comparative analysis method

Through the analysis of a number of cases, compare their differences and similarities, and then summarize the general rules of the common problems, find out the reasons for the difference from the personality, and finally get meaningful conclusions.

Methods

The two parties are too optimistic and the performance commitment standard is too high, which leads to the difficulty of achieving the performance

commitment.

The buyer has not enough restraint on the management of the acquirer and does not have enough supervision and promotion to the

buyer.

Possible reasons

The success rate of

M&A

with performance commitment is higher than that without performance commitment

.

Low or too high performance commitments will lead to a decline in the success rate of mergers and acquisitions.

Possible

results

Both sides should be cautious and set the standard of performance commitment.

The acquirer should play a supervisory role to avoid the moral problems of the management of the acquired party due to asymmetric information.

Suggest

Thanks

WuDingDing 17721007